Life Insurance

15 Ways New Physicians Can Get On Track Financially

Your first year in practice is busy. In fact, you may have overlooked a few financial moves that can save taxes, avoid problems and lead to success. While financial planning for doctors is not complicated, it does require time and energy that’s in short supply during the first year or two of practice. To start making progress, you can use the following steps as a checklist to get on track with your finances.

1. Choose your family’s financial leader.

Your finances will run more smoothly when you choose one family member to be responsible for your money. That doesn’t mean they make all the decisions alone. It means all financial communications and major decisions pass through their hands so that they can keep your family moving in the right direction. If you are not sure whether you or your spouse will be better at this, pick the person who is more organized, the person who checks the mail, or the one who is most plugged in to the online world.

2. Find a competent, caring financial advisor.

Your family CFO may need someone to act as their eyes and ears, to keep them informed, and give them guidance. When you select an advisor look for one who will listen to you, speak clearly, and make themselves available to help when needed. Be certain the advisor is a fiduciary who is compensated on a fee-only basis with at least ten years experience and the Certified Financial Planner™ mark.

3. Find a bank that will save you time.

Look for a bank that’s large enough to handle your needs, but small enough to offer responsive service. If a “relationship banker” is available to you, be certain to spend some time getting to know them and what they can do to make your financial life run more smoothly. If you are banking your medical practice, a community-based bank might be a good fit for you. If you have minimal banking needs, consider using a credit union instead. They tend to offer higher rates on deposits and lower rates on consumer loans and lines of credit. The best bank won’t make you money but it will save you time.

4. Find a responsive, knowledgeable tax preparer.

Medical specialists earn more than 95% of all other taxpayers. That’s the good news. The bad news is that you will give up about half your earnings to the taxman over the next 20-40 years of your practice but a solid tax person can help you pay no more than you absolutely must. To find the right tax preparer, get a name or two from your colleagues and ask your financial advisor for a third name. Interview all three candidates and choose the one who makes you feel most comfortable. Avoid tax advisors who sell insurance and investments. Schedule a November tax planning session for the current tax year.

5. Use a reasonable, approachable attorney.

The best way to use an attorney is early and often. To find the right one, ask your colleagues who they use, ask your tax preparer for a referral, and ask your financial advisor who they prefer, then select your attorney before you really need their help. The best choice is likely to be a business attorney who also handles trusts and estates. Ask them to prepare a simple will for you now, and plan to do more complex estate planning as your net worth grows.

6. Re-examine your disability insurance.

You may have purchased disability insurance as a resident, but you’re probably not “covered.” Why? Because your income has increased now that you’ve begun to practice. Disability coverage is one of the most complex forms of insurance and special provisions apply to physicians. Seek the help of a disability insurance specialist who has at least 10 years experience with disability insurance for doctors and ask them to explain the “definition of disability” for any policy you own or may be asked to purchase.

7. Form a general financial game plan.

Before you make any major financial decision, find out how much it will cost to achieve the goals that lead to financial security for your family. Ask your financial advisor to help you put together a plan to refinance your student loans, save for college, and build a fund for retirement. Try to answer the question, “How much do I need to save each month to make sure I’m on track?”

8. Purchase a reasonable home.

Note that we didn’t say, “Build the nicest home you can afford.” Many, many physicians jeopardize their ability to achieve financial security by buying an expensive home whose payments make it challenging (or impossible) to save for other goals like college and retirement. Think about what your family needs in a home, form a budget, and stick with it. Once you become accustomed to living in a larger home, there’s no going back to a smaller one.

9. Load up on life insurance… term life insurance, that is.

Ask your financial advisor to help you calculate how much money you may need in order to pay off your home, create a college savings fund, establish an income for your survivors, and cover the cost of their retirement. Remember to diversify your policies the same way you would diversify an investment portfolio. Plan to pare back your coverage over time as you make progress toward your goals. Avoid permanent or “cash value” life insurance, especially variable universal life (VUL).

10. Re-discover your employee benefits.

If you work for a hospital or clinic, ask your human resources person to provide a list of all the benefits available to you – retirement, insurance… even parking passes – and schedule a time to meet with them to review the list. Make sure you’re getting the benefits you earned. If you are self-employed, talk to your financial advisor about ways to save taxes while you save for retirement, including a solo 401(k), profit sharing plan and defined benefit plan or “cash balance” plan.

11. Get a PLUP.

No self-respecting physician would willingly go without malpractice insurance but many will drive cars, walk dogs and coach sports teams without the type of insurance that protects them from claims that arise from accidents in these activities: a Personal Lines Umbrella Policy (PLUP). Ask your property and casualty agent to integrate your PLUP’s coverage with your home and auto insurance.

12. Establish an emergency savings account.

If you and your spouse/partner both work, set aside at least three months worth of living expenses. If only one of you earns an income, set aside six months worth of living expenses. Put this money in a safe place like a bank certificate of deposit or money market fund. You may never need it, but if you do you’ll have it.

13. Get a handle on your student loans.

Refinancing a student loan means getting a new loan to pay off an old one. The key is to get better terms—a lower interest rate or a lower payment—on the new loan without sacrificing protections, pledging more collateral or adding a co-signer to the new loan. A sound refinancing decision requires physicians to know the costs and benefits of their current student loans and be able to compare them to the costs and benefits of options for new loans. Think twice before you refinance federal loans using a private loan.

14. Start saving for college.

Kids grow up in a hurry, and the cost of college education has historically grown at a rate more than twice the average rate of inflation (about 7% per year). After you’ve fully funded your retirement plan and your emergency savings account, this is probably the next best place to be saving and, for most physicians, a Section 529 college savings plan is the best vehicle. Check to see if your state’s 529 plan offers tax incentives.

15. Organize your financial life.

At home, make a place for everything: bank statements, investment records, estate planning documents, insurance policies, tax documents, etc. Develop a system for keeping track of passwords so that you and your spouse/partner both know how to access your online accounts. Consider the installation of a safe for valuables and extra boxes of checks. (Most embezzlement situations we see begin when the nanny or housekeeper steals a spare set of checks.) If you use a cloud-based service to store everything, make sure your spouse has access in case something bad happens to you.

Get Started!

As a new physician, it may be challenging to find the time and energy to pull all of this together. Set aside some time this weekend, tackle one of these items, then come back to this list every now and then until you manage to get your family’s financial planning all done.

The Minimalist Guide to Estate Planning for Doctors

Doctors despise two things: lawyers and paperwork. Not surprisingly, many physician families are short on life insurance, lacking a will and have no plan to make sure their spouses and children will be financially secure when they die prematurely.

Estate planning may seem morbid and time consuming but there are a few easy things you can do to start getting on track with a bare bones estate plan.

1. Get $6 Million in 20-Year Term Life Insurance

Term insurance is the purest, simplest and cheapest form of life insurance and it’s the only kind of life insurance most physician families  need. It covers you for a period of time (the “term” of the policy) and pays a benefit in the event of death. A 20-year term is adequate for most physician families since it covers the time between now and when your kids should be ready to go off to college. It also buys you time to accrue substantial equity in your home while you start building a retirement fund and a college fund.

Since life insurance benefits are free from income tax in most cases, a six million dollar benefit is enough to purchase or pay off a reasonably-priced home, send two kids to a top notch college and provide an income of $8,000 per month for the next fifty years, an amount comparable to the after-tax income of a primary care doctor. Premiums for a healthy young doctor who doesn’t smoke run about $10 a day.

Almost any licensed life insurance agent will do when it comes time to buy term life. The product is practically a commodity since the price is governed by your state’s insurance commissioner. You will have more options if you use an agent that represents more than one company, and you are likely to get a better deal. However, if the agent offers you “permanent” or “cash value” life insurance, particularly variable universal life (VUL), take your business elsewhere.

2. Make A Will

If you have an estate of $2 million or less (which is most young doctors), you can get away with a “simple” will that determines who will raise your children, who will handle any assets you leave them, and who gets the rest of your “stuff.”

While all states have “intestate laws” that determine what happens when you die without a will, these laws vary from state to state and may leave very important decisions in the hands of the court system.

Ideally, you and your spouse would carefully select a competent, caring attorney, have them custom-craft all of your estate planning documents and give you counsel over the coming years to keep everything on track.  However, if you are pressed for time and you wouldn’t otherwise seek legal counsel, you can make a DIY will using software products from LegalZoom or Nolo to get the job done.

3. Check Beneficiary Designations

Some assets—retirement accounts, college savings plans, health savings accounts and property held in joint title can pass to your heirs and beneficiaries by a process called “will substitute.”

Assets transferred by will substitute have a built in mechanism that determines what happens to them upon death. Joint assets pass to the surviving joint tenant. Retirement accounts pass to the named beneficiary and so do health savings accounts. College savings plans pass to the “successor account owner” (not the child, in most cases).

If you haven’t reviewed these beneficiary designations and titles in the past three years, it’s time to check into the matter. You can login to your retirement accounts (401k, 403b, Roth IRA). You can call the company that holds your 529 plan. You can find out exactly who owns your house by visiting your county's recorder, tax assessor or appraisal office online. No attorney required.

While this may seem redundant, you might be surprised by what you find: no beneficiary designation at all, accounts left to minor children, property held with ex-spouses, etc.

4. Make Things Accessible

There’s nothing like the convenience of an online bank account. You can login any time you like, check your balance, move money around and pay your bill. However, if your spouse cannot access your online accounts, the hours and days after your demise will be difficult and scary for them.

To make life easier for your survivors, put your usernames, passwords and other login credentials (including the secret answers to account verification questions) in one secure place where you can grant access. Password management software like Lastpass makes it easy to keep this information secure while allowing you to share it with people you trust.

While this “one size fits none” approach to estate planning will not reduce estate taxes or avoid probate, it’s better than nothing and it goes a long way toward easing the post-death transition for surviving family members.

If you are interested in a custom-tailored estate plan that can protect your assets and keep your family on track with their finances even if you die, contact us for help or check out our guide to estate planning for doctors.

7 Steps to a More Financially Secure 2016 | Oncology Practice Management

It is a new year. That means you have another chance to start over again, to take a fresh look at your finances, and to get on track for the future. So, where should you begin? Every physician should take several steps when moving toward financial security, and we want to share a few of them with you at the beginning of 2016.

1. Delve into Your Disability Insurance Policy

When was the last time you reviewed your disability insurance for doctors policy? If it has been more than a few years, it has been too long. Things change, and your coverage should keep pace. If your earned income is higher now than when you originally purchased your policy or last updated your coverage, chances are very good that you are underinsured.

Next, sit down and read through each of your policies. Pay special attention to the definition of disability. Ideally, your policy should include a true or pure “own-occupation” definition of total disability, which specifically states that you will be considered totally disabled if you are unable to perform the material and substantial duties of your occupation.

This definition allows you to work in another occupation or medical specialty and to receive full benefits, regardless of the income you earn from another occupation or medical specialty. Some companies will even go as far as to state that if you have limited your practice to a professionally recognized specialty in medicine, that specialty will be deemed your occupation.

Look for medical exclusion riders. Were you suffering from low back pain when your policy was issued?

Were you seeing a psychologist while you were going through a divorce? If so, you may have a rider on your policy that excludes these preexisting conditions. But if that divorce is far behind you and your back is much better now, you can ask your insurance company to reconsider those exclusion riders to close the gaps in your coverage.

Last, but not least, see if your policy includes a “multilife” or association discount. Although this can provide male physicians with a savings of only 10% to 15% off of their policies, female physicians can save as much as 60% of the normal female rates, if a gender neutral or a “unisex” rate is available. Therefore, if you are still healthy, and your policy does not include any discounts, it may make sense to “shop” the marketplace to see if you can obtain a similar policy for a lower premium relative to when you first purchased your policy.

2. Lift Your Umbrella to Cover Your Assets

The past 7 years have seen a dramatic rise in stock prices and home values, so there is a good chance that your net worth has increased. That is the good news. The bad news is that you are now a bigger target for lawsuits than ever before. Although your malpractice coverage may protect you from bad outcomes in the clinic, there are plenty of dangers lurking in your everyday dealings, so you need to make sure that all those risks are covered too.

The liability coverage under your homeowners and automobile policies is your primary layer of protection. However, if you need additional protection, you should purchase an excess liability or “umbrella” policy. Personal umbrella liability protection is secondary coverage that works in conjunction with your primary policy. When the liability limit of your primary policy is exhausted, the umbrella policy will pay the balance of a liability claim against you up to the umbrella policy’s limit.

You should also avoid structuring your automobile and homeowners policies with low deductibles. Low deductibles will cause your premium rates to rise substantially. Therefore, it is best to increase your deductibles to at least $1000 and to devote the premium savings toward increasing your liability limits and/or purchasing an umbrella or excess liability policy.

3. Establish an Emergency Fund

When you look into your bank account, what do you see? Typically, we see physicians with 2 accounts, a checking account and a savings or a money market account. Although that is acceptable, it means that your emergency fund, if you have one, is pooled with all the other monies you use to pay your expenses, go on vacation, and pay your taxes. So, how much of that money is really reserved for bona fide emergencies? There is no way to tell.

You, your spouse, and your loved ones can gain great peace of mind by simply segregating your emergency fund into its own separate account, such as a checking account, savings account, or money market account, which can be easily accessed without penalty. This is a fund to be used for unforeseen or overlooked expenses. Although the size of the fund is a personal decision, suggestions range from 3 to 6 months of your living expenses. Either way, keeping this fund separate from all your other accounts makes it easier to see, so that everyone knows that the safety net is real.

4. “Max Out” the Match

You would not walk away from free money, would you? Of course not. Nonetheless, we routinely see physicians who miss out on their employer’s matching retirement plan contribution by failing to max out their own elective deferrals.

To make the most of your retirement plan, contribute all you can. The maximum elective deferral into Section 401(k), 403(b), 457(b), and government thrift savings plans remains unchanged for 2016, at $18,000 for most physicians and $24,000 for those aged 50 years or older this year.

While you are thinking about your workplace retirement accounts, take a look at the investment options in your plan. Have they changed? Each year, your plan fiduciaries (the people who put together the list of mutual funds from which you can choose) are supposed to review the options you have to choose from so you have ample opportunity to diversify your holdings. The key word here is “opportunity,” because it is your job to actually make the final decision about how to invest.

5. Do Not Tolerate High Interest Rates

Banks and financial institutions are bending over backward to win physicians as customers. After all, you earn 6 figures in a 5-figure world, and you are the pillar of your community—both of these make you a good risk for lenders. Make them earn your business.

Review all your loans—your student loans, your mortgage, your car loans, and your credit card balances—and then ask yourself, “Is this the best they can do?” Then call up your lender(s) and at least one other bank or financial institution, and ask them the exact same question.

When you get an offer from one, compare it with the other offers you have received. Ask if you can qualify for a lower interest rate and, if you do not, ask if they can waive an origination fee or see if you can qualify for less restrictive terms. Maybe one wants your spouse to cosign, whereas another does not. Do not forget that you are the customer and deserve only the very best.

6. Raise Your Deductible to Lower Your Taxes

Health savings accounts (HSAs) have been in use since 2003, but many physicians are just now learning how they work. If you have a qualifying high-deductible health plan, you can open an HSA for yourself or your family and contribute $6750 in 2016 (for family plans) or $3350 for individual plans, plus an additional $1000 for those aged ≥55 years.

Although $6750 may not seem all that much in the grand scheme of things, your HSA contribution can deliver permanent income tax savings plus years of tax deferral. For example, a physician in the top federal tax bracket can reduce his or her tax bill by $2673 when he or she makes the maximum family contribution.

However, many physicians who are using an HSA account are using it the wrong way. They will contribute to the account, get the tax break, and then spend the account down to zero on medical bills. A better strategy is to pay those bills out of pocket and invest the account balance, so that it can grow tax deferred for retirement, when it can be used to pay for healthcare.

7. Take a Second Look at Your Life

People are living longer today than ever before, so life insurance premiums have decreased steadily over the past several years. So if it has been many years since you reviewed your coverage, now is a great time to do so.

You should use the services of an experienced insurance agent who represents several companies to help you get the best rates, especially if your health is less than perfect.

The agent will know which carriers are likely to provide you with a better underwriting classification based on your height and weight, immediate family history, and/or other medical issues to allow you to secure a lower premium rate.

For example, if you are being treated for hypertension, certain companies will allow you to qualify for their best underwriting classification, but others will not. After all, using an agent or applying for the insurance product online will not cost you any additional money.


This article provides 7 steps to help you reach a more financially secure 2016. The key is to take the time to evaluate which of these concepts, if any, works for you in terms of your personal financial planning. After all, most people “don’t plan to fail, they simply fail to plan.”

W. Ben Utley, CFP, is the lead advisor with Physician Family Financial Advisors, a fee-only financial planning firm helping doctors throughout the United States to save for college, retirement, or other financial goals. He can be reached at 541-463-0899 or by e-mail at

Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF, is the founder of Physician Financial Services, a New York–based firm specializing in income protection and wealth accumulation strategies for physicians. He can be reached at 516-677-6211 or by e-mail at with comments or questions.

This article originally appeared in page 42 of the January 2016 print edition of Oncology Practice Management.

Umbrella Insurance - Malpractice insurance for every day living | W. Ben Utley CFP® writes for Orthopreneur

As a physician, you have a bright red target painted on your back with a big dollar sign in the bull’s eye. Everybody wants a piece of you. While there’s nothing you can do to keep them from suing you, you have plenty of options when it comes to protecting yourself.

At work, you have malpractice insurance but what can you do about liability you might incur throughout the course of your life outside your profession?

If you crash your car into someone, your auto insurance will cover you. If someone trips and falls on your property, your homeowner’s insurance covers that. But what if something really bad happens? What if the defense—and the damages—are substantially more than the limits on your policies?

You can pay the costs out of pocket if you have the resources but if you don’t, the person who sues you may attach your future earnings to satisfy the liability.

Open Your Umbrella

To protect yourself, what you really need is something like malpractice insurance for everyday living. In fact, there is a special form of property and casualty insurance that’s layered on top of your homeowner’s and automobile insurance policies. Since it covers liability “above and beyond” that afforded by your base layers, it’s known as “umbrella” insurance.

This “excess liability insurance policy” sits on top of your other coverage and picks up the liability where the base layers leave off. It can pay for your legal defense and cover the damages up to the limits of the policy.

For example, let’s say you are implicated in a motor vehicle accident and found liable for a bodily injury claim totaling $1,500,000. If your auto policy’s liability limit is $500,000 and you did not have an umbrella policy, you would be expected to meet the remainder of that claim ($1 million) yourself. However, if you had a $1,000,000 umbrella policy layered on top of your auto coverage, you would be adequately protected since your base policy would pay the first $500,000 and the umbrella policy would cover the rest of the claim.

Umbrella insurance may also protect you from losses not covered by basic liability insurance.  It often covers damages for unusual occurrences  including personal injury losses due to libel, slander, wrongful eviction, false arrest, and invasion of privacy.  Your umbrella liability policy might also pay for damages incurred in situations where coverage from auto and homeowner’s insurance might not apply, as may be the case when you are traveling.

In addition, an umbrella policy might pay a proportionate share of a claim even if your basic liability insurance policy cannot pay its portion, either because you failed to comply with the conditions of the base policy or because the base layer insurer has become insolvent.

Be aware that umbrella policies usually do not protect you against damages you cause intentionally, liability that you accept contractually, liability related to planes, boats and other “toys” (which should be covered under other policies) or damages arising out of business or professional pursuits (which is usually covered by your malpractice insurance).

Big Risks, Little Premiums

If all this talk about millions of dollars makes you think, “this insurance must be expensive…” guess again. The perils covered by umbrella insurance are as rare as they are catastrophic, and the premium reflects this fact. The average $1 million umbrella policy comes with an annual premium ranging from $300 to $500, while a $5 million policy might cost you $600 to $700 per year, or about two dollers a day. If you have a weak credit history, a bad driving record, or teenage drivers in your household, you may pay a little more.

While paying the premium is easy, knowing how much coverage to get is the hard part since it’s not an exact science. The best practice here is to get somewhere between $1 million in umbrella coverage (obeying the “something is better than nothing” principle) and as much as your insurer will allow (which conforms to the principle of least regret).

Getting enough insurance to cover all your assets plus another $500,000 for legal defense seems like the happy medium. For example, a physician with a net worth of $2 million might opt for $2.5 million in coverage. As you make your decision, you might also consider factors such as how often you have guests in your home, how many miles you drive and whether your kids are likely to cause you to incur liability.

The best place to start shopping for coverage is with the insurance companies who currently cover your autos and your home since these policies are prerequisites for coverage.

When you set up your coverage, make sure there’s no gap between the top limit of your base layer coverage and the bottom limit of your umbrella policy. For example, if you have a $300,000 liability limit on your home, you might find yourself out of pocket for $200,000 when you incur a $1.5 million liability and also have $1 million in coverage from your umbrella policy. The first $300,000 would be paid by your base layer, then you would pay the next $200,000 and your umbrella would pay the remainder of the claim. A little diligence in the process can save you a bundle.

As a physician, you already know people think you’ve got deep pockets. By putting a cheap but vital second layer of coverage on top of your base layers, you can show them the money if your legal team can’t show them to the exits first.

About the Authors

Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF is the founder of Physician Financial Services. Based in New York, he offers income protection and wealth accumulation strategies for physicians nationwide. Contact him at (800) 481-6447 or

W. Ben Utley, CFP®, is an attending advisor with Physician Family Financial Advisors, a fee-only financial planning firm helping physicians throughout the U.S. to make a plan and get on track with saving for college and invest for retirement.

This article originally appeared in Orthopreneur with the title "Umbrella Insurance: Malpractice Coverage for Every Day".

Should physicians buy Variable Universal Life insurance? | W. Ben Utley CFP® answers in Ophthalmology Business magazine

Should physicians buy variable universal life insurance?
Should physicians buy variable universal life insurance?


"I just became a partner in a small group practice. My tax person tells me the bump in pay is going to mean a lot higher taxes. I am maxing out my 401(k) but still I got a huge tax bill last year. The agent who sold me my disability insurance policy says I should buy some variable universal life insurance from him because it will save me taxes, but I already have $2 million in term coverage from USAA for my wife and kids. One of my partners thinks VUL is a bad deal. What do you think?"


Since it’s early in your career and you have a family to think about, it makes sense to have life insurance. Based on what I have seen in similar cases, $2 million is a good start but it’s not enough to provide everything your family might need to pay off the house, send kids to college (or private school), and pay ongoing costs of living without you. So I do think you need more coverage, but I do not believe variable universal life insurance is the answer.

As a form of cash value insurance, VUL combines the benefits of life insurance with the features you might find in a mutual fund investment. The word “variable” refers to the fluctuations in the cash value as a result of changes in the value of the investments it holds, while the word “universal” means that premium payments are flexible (like a universal joint is flexible).

I would have named this product “variable flexible life,” or VFL for short, but I figure the “F” might be misinterpreted to stand for “fallacious” since misguided physicians who buy this stuff suffer from the mistaken impression that they will save taxes while making a great investment that will protect their families.

The promise of tax savings is more fiction than fact. Sure, the cash value has potential to grow tax-deferred and the death benefit might be income tax-free, but these benefits are not the same as true, permanent tax savings. Since Congress closed most of the loopholes with the Tax Reform Act of 1986, permanent tax savings have grown increasingly scarce, particularly for medical specialists and other taxpayers in the top brackets.

A VUL policy’s tax deferral feature—arguably the only attribute of any value to an investor—may actually cost physicians more money in both the short and long term.

Under current tax law, long-term capital gains and qualified dividends are taxed at a lower rate than ordinary income, but the gain on complete withdrawals from a VUL policy will be taxed as ordinary income. Given that the top federal tax rate on ordinary income is fully 23 percentage points higher than the capital gains rate, equity-based investments made in a variable universal life product may result in taxes that are twice as high as those paid on gains from investments in an after-tax account (a jointly held mutual fund account, for example).

To be clear, a VUL policy will not save you a dime in taxes but it may cost a fortune in fees. The mutual fund-like “separate account” investment options available inside these policies are laden with costs, including operating expenses for underlying funds, management fees layered on top of that, plus an annual policy fee. “Paying those expenses is like rowing a boat with a hole in it. No matter how fast you row, you’re gonna sink,” says Lawrence Keller, an insurance expert with Physician Financial Services, Woodbury, N.Y.

There’s a huge incentive to push these policies. Since it’s common for agents to receive at least half of the first year’s premium as commission, your $50,000 investment means the agent will walk away with $25,000. Not a bad payday… for him. But when you try to walk away from the policy yourself, you will trip over one last expense that physicians often overlook: the surrender charge. Since the insurance company pays the agent up front, it can only recoup the cost by locking you into the policy or charging you heavily if you pull out before they’re done, which may be 10 or 15 years. “Buying a VUL policy is a lot like buying a new car,” said Mr. Keller. “The day after you buy it, it’s worth less than you paid for it.”

Your partner had it right when he cautioned you against VUL, especially when there are so many other vehicles that might be a better fit for you.

Consider term life insurance. Like auto or homeowner’s coverage, term life is pure insurance without cash value. Term life costs far less than VUL on a dollars-per-thousand basis, so every premium dollar buys you more coverage than it would with VUL. You will send less money to the insurance company and keep more for your family.

What can you do with the money you save?

Look into a Section 529 college savings plan. Contributions grow tax-deferred (just like VUL) but withdrawals from a 529 plan are free from income tax when used for qualified higher education expense. Some states will even give you a break on your state income taxes when you contribute—a real, permanent tax savings. (See “Section 529 plans: The best way for doctors to save for college” in the July 2012 issue of Ophthalmology Business.)

Check out a “back door” Roth IRA contribution. Given the average physician’s income, it’s unlikely that you can make a direct contribution to a Roth IRA, and you probably cannot deduct contributions to a Traditional IRA (not unlike VUL). However, you can still make non-deductible contributions to a Traditional IRA, and your spouse can too. After you have made your contribution, ask your tax advisor if it makes sense to convert your Traditional IRA to a Roth, where those contributions can grow tax-free for retirement, no matter how much Congress amps the pain on taxpayers in the top brackets.

After you have maxed out your 401(k), your IRAs, and your 529 plan, think about investing in low-cost, tax efficient equity index funds or exchange-traded funds (ETFs) from companies like Vanguard, Barclays, or Dimensional Fund Advisors. To keep the balance right (and avoid the dreaded Medicare surtax on unearned income), you might also pick up some tax-free income from a municipal bond fund. Finally, you and your partners might want to adopt a defined benefit retirement plan (a “pension plan”) to soak up excess cash that can grow tax-deferred for the long haul.

Keep an Eye on Your Money

The key to financial security is vigilance. Get curious. Ask questions! Dig for answers … or email your questions to so I can do the digging for you. If I use your question in “Eye on your money,” I will send you one of my favorite personal finance books to feed your head and a cool “Eye on your money” coffee mug to satisfy your thirst for answers.

Mr. Utley is president and founder of Physician Family Financial Advisors Inc., which delivers fee-only financial planning and independent investment advice to clients coast-to-coast. Contact him at 541-463-0899 or visit

This article originally appeared in the April 2013 ezine of Ophthalmology Business, pages 12-13. To download a PDF version, click here.